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Institute issues warning over plans to scrap employment tribunal fees

The Institute of Directors has voiced concern about Labour’s plans to radically overhaul employment tribunals.

In a recent speech to the TUC Congress, the Shadow Business Secretary Chuka Umunna signalled that, if elected, his party would scrap the system of fees introduced last year.

James Sproule, the IoD’s director of policy, warned that this could see an increase in the sort of “spurious” claims that business leaders believe the fees have deterred.

“Fees are a sensible way to weed out weak or vexatious claims before they reach employment tribunal,” said Mr Sproule.

“Before the refundable charges were introduced, fewer than 1 in 10 tribunal cases against IoD members were won by the claimant, wasting large amounts of money and management time for businesses.

“Claimants on benefits or low incomes are exempt from the fees so we do not think they are a barrier to wronged employees getting compensation. Labour must be very careful that they do not once again make the system a one-way bet, where the entire burden is on the employer.”

The new fees regime was drawn up by the Coalition government and came into force in July 2013. Recent figures from the Ministry of Justice show that since the new system was introduced, the number of tribunal claims has fallen by 70 per cent.

Trade union leaders and the Citizens Advice Bureau are among those to have raised concerns about the new arrangements, arguing that they are preventing some employees from pursuing legitimate claims.